Germany: Buyer of two AB InBev breweries unable to meet second deadline

Waterloo is located in Germany, at least for AB InBev. The designated buyer of AB InBev’s two breweries Hasseröder and Diebels, the financial investor CK Corporate Finance and its controversial managing partner Daniel Deistler, will be unable to meet another agreed deadline to comply with the agreed terms and conditions of the purchase. Frankfurter Neue Presse reported today that it is “considered unlikely” that the sale will be completed, as agreed. According to banking circles, there are several sticking points including the financing of the purchase price of around 200 million euros for the Pils brewery from Wernigerode (Saxony-Anhalt) and the Altbier producer from Issum (North Rhine-Westphalia).

AB-InBev did not like to confirm this news. Instead, the company said vaguely:  “As of today, it cannot be seen whether it will come to an execution of the deal”.

Hasseröder Brauerei and Brauerei Diebels, which produce together more than 2 million hl of beer, were up for sale since June 2017. (inside.beer, 21.6.2017). In January 2018, AB InBev proudly announced the sale and said that the transaction would be completed latest by mid-2018. At that time people close to the matter already wondered about the investor who was totally unknown in the industry. (inside.beer, 16.1.2018) In July, AB InBev had to confirm rumors that CK Corporate Finance Group was unable to meet the contractual requirements for the completion of the within the agreed time. The German subsidiary of the world’s largest brewer said that it would be “again holding discussions with selected interested parties in parallel with its cooperation with the CK Corporate Finance Group.”  Harm van Esterik, head of AB InBev Germany, also said: “We are actively working on alternatives and testing offers - especially with regard to our employees, brands and locations."

Due to legal reasons, AB InBev had to give the first investor a second chance. But since another reasonable period of grace went by unused, AB InBev is thought to present soon an alternative investor. However, it is unlikely that AB InBev will again achieve a sales price in the range of 200 million Euros. Potential investors who took a look in the books reported that AB InBev will most likely even have to support the sale with additional financing.

AB InBev confirmed intensive talks with several interested parties. "These are prospects who are already familiar with the business and with whom we can quickly enter into detailed negotiations. It is still our intention to sell Hasseröder and Diebels together, “the company said.

The combined sale of both breweries will be, of course, a hindrance to a management buy-out, as most of the private investors do not have the financial power or backing of banks to finance a deal of this size. However, a management buy-out seems to be the only solution to safeguard the two companies, which are in the danger to be split up and sold in parts. There are many examples in the German beer industry where institutional investors have failed and private investors finally managed to save the company.

 

Newsletter

Please subscribe here for your free weekly newsletter!